KBRA Affirms Ratings for JFK NTO LLC’s $4.55 Billion Special Facilities Revenue Bonds and $1.78 Billion Term Loan and Related Facilities Financing

KBRA affirms its BBB- ratings to JFK NTO LLC’s aggregate $4.55 billion special facilities revenue bonds and $1.78 billion term loan and related facilities for Phase A of the Terminal One redevelopment project, also called New Terminal One (NTO), at New York’s John F. Kennedy International Airport (JFK). A portion of the series 2024 bonds ($800 million) benefit from a financial guaranty policy issued by Assured Guaranty Municipal Corp., which has a KBRA rating of AA+. The Outlook is Stable.

JFK NTO LLC (the borrower) operates Terminal One under a lease agreement with the Port Authority of New York and New Jersey (PANYNJ) and is currently engaged in the NTO project.

Key Credit Considerations

(+) Construction Works are Progressing

The notice to proceed (NTP) was formally issued on June 10, 2022. Since then, design has progressed as planned. PANYNJ issued a letter on April 20, 2023, allowing the comprehensive final design (CFD) process to close and to progress with advanced final design (AFD). The contractor has been able to mitigate non-critical delays that occurred with respect to foundation works as a result of increased utilities relocation through resequencing of specific elements and working extended shifts. In January 2025, NTO requested the DB Contractor to submit an alternative solutions report (ASR) including a plan to recover the delays and showing a realistic path to timely completion of the works. The DB Contractor submitted the response in two parts; part two was delivered at the end of March 2025. As of April 2025, the Management Schedule maintains a Phase A DBO date of June 1, 2026.

On the headhouse, carpentry is progressing at all three levels at all the available areas, progress on the roof is ongoing, with the ticket hall ceiling being completed as well. In the east pier, curtain walling and roofing has continued, and progress has been made on the gates and the final southern section. On the landside, the departure bridges are underway, the east ramp substructure works have been completed, and the canopy foundations are ongoing. The January 21, 2025, roadways, utilities and ground transportation center (RUGTC) milestone was achieved ahead of schedule and NTO has access to all the departures substructures. On the airside, hydrant fueling works, pavement, earthworks, and passenger boarding bridge installations are being completed. The TOGA VIP area has been completed, the VIP vehicles have been successfully relocated, and the taxi area has been reopened at its new location.

(+) Construction Payment and Progress to Budget

The total NTO project costs remain unchanged from the original budget of $5.739 billion. As of the end of April 2025, the physical progress is at 67.4% based on the revised baseline. The project’s overall progress of 69.3%, based on payments made to the DB Contractor through April 2025, is between the early forecast of 70.9% and the late forecast of 68.9%. Since NTP was issued the DB contract sum has increased to $4.07 billion as of April 2025 from its original budget of $3.927 billion due to change orders and the usage of the developer’s contractor bussing allowance. These increases have been funded from different allowances and contingencies available. There have been a number of approved uses of project contingency; as of April 2025, this approved usage totals $563.8 million or 71% of total project contingency. There is $235.9 million remaining of total contingency net of approved usage. As of December 2024, there is $82 million of short-term retainage and $54 million of long-term retainage.

(+/-) Enplanement Recovery

In 2024, enplanements at JFK were 63.3 million, up 1.9% from 2023 and 1.1% from 2019 levels. Domestic enplanements were 28 million, a decrease of 3.1% from 2023 while international enplanements increased by 6.3% to 35.3 million. Recovery across the different international markets served by JFK has taken place at different levels, generally linked to local restrictions. While traffic volumes at other terminals in JFK have recovered near or even exceeded their pre-pandemic levels, enplanements in Existing Terminal 1, which is the only terminal in JFK that exclusively serves international traffic from non-U.S. carriers, totaled 6.1 million in 2024 which was 23.6% below 2019 levels.

(+) Additional Partnerships Announced

Since June 2024, several airlines have announced partnerships with NTO. The latest partnerships include Neos, Philippine Airlines, Turkish Airlines, Air New Zealand, Royal Air Maroc, and Air China. Turkish Airlines will also build out a lounge for premium customers.

Surveillance Rating Rationale

The Average KPRS is driven by airport’s foothold as the premier international gateway for the New York region, NTO providing additional widebody gate access and services to unaffiliated international airlines operating at JFK, well mitigated construction risk, the diversification of revenues from international airlines, and the demand for widebody gates at JFK. These factors, in conjunction with average debt service coverage ratios (DSCR) of 1.89x and DCF/debt ratios at 1x in each contemplated refinancing scenario under the KBRA rating case, support the affirmation of the BBB- ratings.

Outlook

The Stable Outlook reflects the substantial liquidity during the construction phase, the experience of the contractors, and passenger volumes through JFK to date. An upgrade over the short term is unlikely given the construction and refinancing risks. Once construction is completed and all of the long-term financing is in place, an upgrade could occur if traffic and revenues significantly exceed expectations. A downgrade could be triggered by extensive construction delays or traffic volumes that are consistently under KBRA’s forecast.

Rating Sensitivities

An upgrade is unlikely at this time due to the remaining refinancing risk. Once construction is complete and the term loan has been fully replaced with long-term financing, an upgrade could occur if air traffic and revenue significantly exceed forecasts for an extended period.

In the short term, a downgrade could occur due to construction delays. Once the project is operational, a downgrade is possible if traffic or revenue is lower than expected or if operating expenses are significantly higher than forecast.

ESG Considerations

Environmental Factors

The DB Contractor intends to design and construct the project to achieve LEED Silver Certification and to provide the information necessary to achieve as many additional credits for LEED Gold Certification as are reasonably obtainable without additional design changes or any schedule/cost impacts.

Social Factors

NTO’s environmental, social, and governance (ESG) goals include a target of 30% minority- or woman-owned business enterprise participation across all disciplines and phases through various professional services and other contracted functions.

During construction, the terminal will create over 10,000 total jobs, including more than 6,000 family-sustaining construction positions. Hiring is expected to be focused on the surrounding communities.

Governance Factors

New Terminal One is an international airport terminal. As such, government bodies dealing with immigration, customs, and security have specific requirements that need to be taken into account. Ferrovial’s U.S. staff has extensive experience dealing with various government agencies to ensure their involvement from the start of the project.

The ring-fence structure of this project finance transaction helps mitigate governance risk. Separately, cybersecurity is an increasing concern for energy and infrastructure projects across the world. A cybersecurity attack could not only temporarily halt operations, but also have a longer-term effect on the issuer’s management procedures.

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